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President Obama seeks deal with Congress to hold off deep budget cuts

By Jim Kuhnhennand Andrew Taylor Associated Press

Posted:
02/05/2013 10:55:25 PM MST

Updated:
02/05/2013 11:05:01 PM MST

Click photo to enlarge

President Barack Obama pauses as speaks in the James Brady Press Briefing Room of the White House in Washington, Tuesday, Feb. 5, 2013. The president will ask Congress to come up with tens of billions of dollars in short-term spending cuts and tax revenue to put off the automatic across the board cuts that are scheduled to kick in March 1.

WASHINGTON -- Eager to buy time and avoid economic pain, President Barack Obama urged Congress on Tuesday to pass targeted short-term spending cuts and higher taxes as a way to put off sweeping, automatic cuts that would slice deeply into military and domestic programs starting March 1.

Obama's appeal came as Congress' budget office projected a yearly federal deficit under $1 trillion for the first time in his presidency and as Republicans applied political pressure on the president to submit balanced budgets, pushing fiscal issues back to the forefront in Washington after weeks devoted to immigration and guns.

A short-term deficit-trimming measure would once again delay the broad and onerous spending cuts that are unpopular with both political parties, underscoring the government's difficulty adopting long-term budget policies. Obama conceded the problem, even though he has previously scoffed at temporary budget reprieves.

"Let's keep on chipping away at this problem together, as Democrats and Republicans, to give our workers and our businesses the support that they need to thrive in the weeks and months ahead," Obama said in a short statement in the White House briefing room.

Illustrating the challenge for the government, the Congressional Budget Office said the government will run a $845 billion deficit this year. That's down from last year's $1.1 trillion but still high enough to require the government to borrow 24 cents of every dollar it spends. The report predicted the deficit would decline to $430 billion by 2015, the lowest since President George W.

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Bush's last year in office.

However, as more baby boomers retire and claim Medicare and Social Security, deficits would move higher and again reach near $1 trillion in the latter portion of the 10-year window.

"We have a large budget imbalance. We have large projected deficits, debt that will remain at a historically high share of GDP and will be rising at the end of the coming decade," said CBO director Douglas Elmendorf. "What that implies is that small changes in budget policy will not be sufficient to put the budget on a sustainable path."

The slight reduction in the projected deficit for this year is due to anticipated higher revenue caused by a higher tax rate on top earners negotiated over the New Year's holiday, the end of a temporary payroll tax cut, a slowly improving economy and a slower rate of growth for health care costs.

Meanwhile Tuesday, on the House floor, Republicans took up legislation to require Obama to submit a budget that would balance within a decade or specify when it would come to balance. The move was more of an attempt at political messaging than legislation likely to become law.

Obama was to have delivered his budget to Congress on Monday, but it's not expected until next month.

The automatic cuts Obama is seeking to avoid are part of a 10-year, $1 trillion deficit reduction plan that was supposed to spur Congress and the administration to act on long-term fiscal policies to stabilize the nation's debt. Though Congress and the White House have agreed on about $2.5 trillion in cuts and higher taxes since the beginning of 2011, they have been unable to close the deal on their ultimate goal of reducing deficits by about $4 trillion over a decade.

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